Non-Profits:

Some people think that a non-profit org is a 501c3 that is tax-deductible. This is incorrect, as a 501c3 org is simply one of dozens of different types of non-profits. The correct terminology for defining a non-profit is simply that it is a membership based organization, where the members actively participate and work to run the organization. Non-profits are any type of organization that does not have an equity ownership, or shareholders. Simply stated, you can not make money as an individual of a non-profit, without being an active worker, as the organization can only pay people who are actively working. Therefore instead of having owners or shareholders, there is only members, and the membership is the highest decision making body of the organization.

There are many different types of non-profits, the most well known is the 501c3 non-profit public charity that receives tax-deductible status. But there are also at least 20-30 other types of non-profits that can get 501 non-profit tax status from the IRS, the c3 is just one of those. Additionally there are religious 501c3’s, as well as 501c4’s which can be used for political activities which is an other popular one. An other popular non-profit structure that is used for everything including businesses, is called a Mutual Benefit Organization. Mutual Benefit Organizations specifically benefit the members of the organization, but can still function as a non-profit, but only benefit a select group of people.